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Pmbf 7401:Theory Of Finance Question Paper

Pmbf 7401:Theory Of Finance

Course:Doctor Of Philosophy In Business Management

Institution: Kenya Methodist University question papers

Exam Year:2013

Theory of finance (PMBF 7401) 1ST RIMESTER 2013

KENYA METHODIST UNIVERSITY

SCHOOL OF BUSINESS AND ECONOMICS

END OF TRIMESTER EXAMINATION FOR DOCTOR OF PHILOSOPHY IN BUSINESS ADMINISTRATION AND MANAGEMENT JANUARY, 2013
UNIT CODE : PMBF 7401
UNIT TITLE : THEORY OF FINANCE

TIME: 3 HOURS

INSTRUCTIONS:

Answer all questions

Question One

Describe Finance Theory

(10 marks)

Modern theory of finance is no longer very modern dating back to the late 1950s. Discuss in details the major theoretical building blocks of financial economics in relation to development of theory of corporate finance.

(15 marks)

Question Two

Financial economics assess asset market performance according to standards or ’efficiency.’ Discuss the main types of efficiency in relation to asset market efficiency.

(15 marks)

Discuss implications of the efficient markets hypothesis for corporate finance.

(10 marks)

Question Three

Discuss the major propositions of arbitrage principle that provide different sets necessary and sufficient conditions for the absence of arbitrage opportunities.

(20 marks)

Give your critic on the propositions discussed in (a) above.

(5 marks)

Question Four

Discuss relevant sets of conditions of assumptions from which the predictions of the CAPM are derived.

(20 marks)

Comment on assumptions of CAPM.

(5 marks)

Pmbf 7401:Theory Of Finance Question Paper

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